Audit firm KPMG chosen to review F-35 costs

An undated photo shows a pre-production model of the F-35 fighter jet. The federal government announced Friday that KPMG is the winner of a contract to review costs for buying the planes. (Northrop Grumman/Associated Press)

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A contract to review the costs of Canada's fighter jet replacement program has been awarded to the audit firm KPMG, the federal government said Friday.

The contract is worth $643,535 and is one of two bids reviewed by Treasury Board and Public Works and Government Services Canada.

The request for an independent audit came in the wake of Auditor General Michael Ferguson's scathing April report on the F-35 fighter jet procurement process. His report found that due diligence was not exercised by national defence and that a different cost estimate for buying 65 planes was given to the public than the one known inside the department.

In response to the report, the government announced a seven-point plan that included the pledge for verification of previous cost estimates from national defence and a new National Fighter Procurement Secretariat to oversee the selection of a new fleet of planes to replace the CF-18s.

The government says KPMG will review the acquisition and sustainment cost estimates from the national defence department that have been the subject of ongoing controversy. The work will also involve coming up with a lifecycle cost estimate for a fleet of 65 F-35 fighter jets.

The estimate will include the costs for developing, acquiring, sustaining, operating and upgrading the plane, and eventually decommissioning it.

Original tender re-issued

The announcement of the winning bid comes after the original tender had to be re-issued because it initially didn't allow accounting firms enough flexibility to sub-contract portions of the project.

Public Works Minister Rona Ambrose was asked in early August whether the delay would affect the pledge to table an independent cost assessment in Parliament this fall.

"The National Fighter Procurement Secretariat is committed to getting this done right and in a timely manner," a spokeswoman for Ambrose replied.

The government hasn't yet signed a final contract to buy the Lockheed Martin plane but has invested millions of dollars in its development, along with other allies participating in the joint purchasing program.

The government announced in July 2010 that it intended to buy the F-35 but now says the program is on hold and no final decisions have been made.